VAT ON RETROFIT WARNING

Reducing VAT on retrofits is pivotal to encouraging homeowners to reduce their energy consumption, thus reducing fuel use and lowering heating bills, the government has been warned. A report by the Environmental Audit Committee (EAC) called Growing Back Better makes recommendations for the government to cut VAT on retrofits (the current rate is 20%).This, the authors say, will “incentivise installation of low-carbon domestic technologies and improve energy efficiency of homes”.

Retrofitting a home helps to improve its energy efficiency. This process differs from renovating a house or making aesthetic home improvements.

The built environment accounts for roughly 40% of the UK’S greenhouse gas emissions, with 20% of this coming from its 28 million homes. Cutting tax on retrofit is seen as a way of incentivising homeowners to repair and refurbish, which could make their homes more energy efficient. Campaigners also say that a mass retrofit of homes could help the UK economy following the pandemic.

Brian Berry, chief executive of the Federation of Master Builders, said: “The government needs to back a long-term National Retrofit Strategy, that sets out an ambitious delivery plan to cut carbon emissions from all our homes.”